Lobbying Titans Square Off Over Loan Limits

Influential housing and banking industry lobbying groups are clashing on Capitol Hill over whether to restore higher limits on the size of government-backed mortgage loans.

The lobbying battle pits real-estate agents against mortgage insurers — and even has banking groups on opposite sides. It comes as House and Senate negotiators prepare in the coming weeks to negotiate the details of a bill to fund several federal agencies through next September. Senate lawmakers want the final spending bill to include a measure lifting the loan limits, which fell to $625,500 on Oct. 1 in expensive markets such as New York and San Francisco from $729,750. Under the Senate’s version of the bill, the higher limits would be restored until the end of 2013.

Powerful Republican lawmakers in the House favor keeping those limits at their current levels. Other Republicans, however, including several from California and New York, want to raise them. The debate highlights a key question about whether the main goal of housing policy: Is the best to support the weak sector or at least do no harm to it? Or, should the top priority be reducing the federal government’s footprint in the $10.4 trillion U.S. mortgage market, given that the federal government stands behind more than nine in 10 new loans?